Making just the minimum monthly payment to your credit card or store card debt could mean that you are imposing a ‘debt sentence’ on yourself for over 30 years.
uSwitch.com have revealed that the 3.4 million people who only pay back the minimum amount on their cards will be paying off their debt for 30 years and 11 months on an average debt £1,384.This is based on the minimum repayment being 2%, which is approximately £5. The lender would make more than £2,000 worth of interest, more than the original debt owed!
Simeon Linstead, head of personal finance at uSwitch.com commented that:”Over the past year we have seen an increase in credit card spending, making minimum repayment levels more of a problem now than ever before. With the cost of living on the up and people being forced to tighten their purse strings, consumers will be more tempted to just make the minimum repayment on their credit cards and spend the cash on more pressing bills.”
Spending on credit cards has increased by £179 million over the last year and the actual minimum payment has fallen from 2.65% to 2.54%.